Why social e-commerce is set to become the next big thing in China

CONSUMERS in China have taken a great liking to social e-commerce – which combines social media and e-commerce – and in the last three years or so, these hybrid platforms have gone through exponential growth.

According to one recent report, the rapid growth of the industry’s gross merchandise volume (GMV) is set to hit US$185 billion this year and reach US$400 billion by 2021.

Social e-commerce, which is a subset of traditional e-commerce platforms, experienced a meteoric rise about two years ago when its GMV grew 255.8 percent to reach US$89 billion, up from US$25 billion the year prior.

The report, which was released by China Internet Watch (CIW) included all the prominent shopping platforms that integrated social media elements into their sales flow. These include outfits such as Pinduoduo, Xiaohongshu, as well as video streaming app iQiyi.

However, it is unclear if informal sales done via social media channels are included in the CIW report.

Social e-commerce taking China by storm

One of the most popular e-commerce platforms that integrated social media features was Shanghai-based Pinduoduo, which is considered a pioneer in the concept of team-buying.

Team-buying is when consumers share the product they wish to purchase on social media. They then buy the item, in large volumes, with friends, at a discount.

This concept not only rewards users for introducing friends to the platform and generating more leads but also drives social engagements that result in high user traffic.

Pinduoduo was launched in 2015 and had become hugely popular among Chinese consumers. The team-buying method had almost doubled the sales for Pinduoduo, and by 2017, the platform’s performance exceeded JD.com, which is quite an impressive achievement.

Meanwhile, another platform that has taken China by storm is Xiaohongshu. Literally translates to “little red book,” the platform primarily targets young female users and sells beauty and fashion products.

Other than being an e-commerce site, the platform also brings together users and communities with similar interest and provides them with a forum to share tips, advice, and recommendations on beauty products.

Beyond that, users also post videos and images of them in the makeup or clothes, to promote the products.

As of January 2019, Xiaohongshu boasts upwards of 200 million registered users. The app was, however, pulled from the Chinese app store recently by as part of data privacy management efforts by Chinese authorities.

Another platform that has been making waves in the space is the video streaming platform iQiyi, which is also dubbed as “Netflix of China”. But unlike Netflix, iQiyi allows users to purchase products while watching their favorite shows.

The platform has more than 100 million paying subscribers, and the number is expected to keep growing.

Integrating social media with shopping in many seems to have revolutionized how e-commerce platforms operate in China. The rise of these new platform indicates that Chinese shoppers are looking for more than just items to buy from retailers. They are also seeking enhanced experiences and engagements.